Retailers posted a second-straight month of weak sales, as warmer-than-usual weather cooled demand for fall clothing and surging gasoline prices and a weak housing sector created a more cautious consumer.
Wal-Mart Stores, midmarket and discount department stores and woman's apparel retailers were among those reporting lower-than-expected monthly sales reports.
The trends do not bode well for the upcoming holiday shopping season.
Retail consultant TNS Retail Forward said an October poll it conducted indicates more shoppers are planning to spend less this Christmas than last year, especially lower-income consumers who face growing job worries.
“Weather explains only a small part of the continued weakness," said Frank Badillo, a senior economist at TNS Retail and director of its Retail Forward KnowledgeBase. "Fuel prices, tighter credit and growing job worries are the bigger drags on retail spending, particularly for lower-income shoppers.”
Wal-Mart, the world's largest retailer, said its same-store sales edged 0.4% higher, excluding the impact of fuel sales. On average, analysts polled by Thomson Financial were predicting an increase of 1.1% for the month.
The Dow component said its U.S. division has a "healthy" inventory position going into the holiday season and that markdowns as percentage of sales were lower than planned for the third quarter. Wal-Mart surprised many by announcing deep holiday discounts on toys and other items in October.
However, the retailer added, "Seasonal categories related to cold weather including those in apparel, home and hardlines were soft."
In an interview on CNBC's "Squawk Box," Telsey Advisory Group Chief Research Officer Dana Telsey said it was not surprising to see the weak trends, given the unseasonably warm weather and the impact from wildfire fires in Southern California.
Many retailers blamed the weather for their disappointing sales. Among them was Kohl's, which said it saw "significant declines" in weather-sensitive businesses such as outerwear, fleece and sweaters. On average, analysts polled by Thomson predicted an October same-store sales increase of 0.5%, but same-store sales fell 3.8%.
Based on October's results, Kohl's reduced its earnings forecast. The department store chain now expects third-quarter earnings in the range of 59 cents to 60 cents per share.
Upscale department store chain Nordstromalso posted disappointing sales. The retailer said its October same-store sales fell 2.4 percent, which was much steeper than the 1 percent decline estimated by analysts surveyed by Thomson.
It's unclear what Nordstrom's results say about the high-end consumer, as smaller rival Saks had a strong showing during the month. Saks reported a much better-than-expected 11% increase.
Other department stores also saw soft demand during the month: Macy's had a 1.5% decline, below its forecast of down 1% to up 2%. Meanwhile, J.C. Penney reported a 1.8% drop, worse than its previously lowered forecast.
Still, J.C. Penney continues to expect that it will meet its reduced earnings outlook, although November same-store sales will only rise by the low-single digits on a percentage basis.
Among the biggest sales shortfalls were Wilson's Leather, Haverty Furniture, and women's apparel retailers Chico's FASand Ann Taylor.
Still, despite the numerous sales shortfalls, not many retailers lowered estimates for the quarter, which was a positive sign. One example of this was Gap, which posted a bigger-than-expected 8% decline in same-store sales. However, the company said it expects to earn between 28 cents and 30 cents per share in the third quarter, which is better than analysts were expecting.
This may be because retailers have already lowered expectations. Target, for example, was able to top its lowered estimates for the month, as same-store sales rose 4.1 percent in October. After reducing its estimates last month, Target was aiming for an October same-store sales increase of between 2 percent and 4 percent.
Analysts, on average, were expecting a same-store sales gain of 2.5 percent, according to Thomson.
Costco, BJ's Top Estimates
Costco Wholesalereported a 9 percent increase in October sales at stores open at least a year, helped by higher gasoline prices. The company also saw strong sales of televisions, computers, digital cameras and deli goods.
Analysts, on average, were expecting the company's same-store sales to rise 5.7 percent, according to Thomson Financial.
Meanwhile, BJ's same-store sales climbed 4.8 percent in October, compared with average analyst estimates that called for an increase of 3.1 percent.
Men's apparel retailer Christopher & Banks turned in a surprisingly strong performance. It raised its third-quarter earnings forecast, while announcing a 22% surge in October same-store sales.